Inter&Co (INTR)

### Deep Research Update: Inter & Co (INTR) **Validation Status:** The original thesis remains fundamentally sound regarding valuation multiples, but requires an update on the **ROE trajectory** and **macro-sensitivity.** --- ### 1. Validation of Thesis * **Valuation:** The 1.2x P/B and ~6.5x-7.0x forward P/E estimates remain accurate based on consensus estimates for FY2024/2025. INTR is currently trading at a discount compared to traditional Brazilian incumbents (e.g., Itaú, Bradesco) due to its "growth-first" profile and higher risk-adjusted capital requirements. * **Performance:** The 15.5% ROE cited is an improvement from previous years but is currently in a "scale-up" phase. Management's stated goal is to reach an ROE of 20%+ by 2027 through operational leverage and lower funding costs. * **Execution:** The "Super App" ecosystem is effectively reducing Customer Acquisition Costs (CAC). Recent data suggests the shift from a pure payment/account-focused model to a credit-heavy monetization model is working, with a focus on high-margin products like payroll-deductible loans (consignado). ### 2. Counter-Thesis (Key Risks) * **Macro-Sensitivity (Brazil Selic Rate):** INTR’s profitability is highly sensitive to the Central Bank of Brazil’s interest rate policy. While a high Selic rate boosts net interest income (NII) on cash balances, it simultaneously increases the risk of credit defaults and slows loan origination. * **Asset Quality Concerns:** As INTR aggressively expands its credit portfolio, the non-performing loan (NPL) ratio remains a critical metric to watch. Any divergence in the 15-90 day delinquency bucket could compress margins rapidly, given their focus on the "mass market" consumer segment. * **Regulatory/Execution Risk:** The expansion into the U.S. market (via the global account) adds complexity. Competition from heavyweights like Nubank (NU) is intense, and the "Super App" model requires constant high-capex investment in software to prevent churn. ### 3. Recent News & Filing Analysis * **Nasdaq Listing Strategy:** INTR has been focused on migrating and consolidating its capital structure to be more efficient as a dual-listed entity. Investors should watch for announcements regarding share buybacks or capital allocation, as the company has recently signaled a transition toward sustainable, profitable growth over "growth at all costs." * **Quarterly Earnings Trajectory:** In recent filings, the company has highlighted a deliberate shift to "Quality over Quantity" in credit originations. They are intentionally slowing down in riskier segments (credit cards) and pivoting toward secured loans (home equity and payroll loans). * **Market Sentiment:** Recent SEC filings (Form 6-K) have focused on strengthening the balance sheet through the issuance of preferred shares and optimizing the capital structure to lower the cost of funding—a positive signal for long-term margin expansion. --- ### Analytical Conclusion The thesis is **supported but contingent.** The stock is not a "deep value" play in the traditional sense; it is a **growth-at-a-reasonable-price (GARP)** play that depends entirely on the company’s ability to keep the NPL ratio stable while scaling the credit book. **Watchlist items:** 1. **NPL Trends:** Any tick up in the 90-day delinquency rate is the primary "sell" signal. 2. **Credit Mix:** Monitor the ratio of "secured" vs. "unsecured" loans in quarterly reports. 3. **Selic Trajectory:** Monitor Brazilian Central Bank guidance; falling rates generally act as a tailwind for INTR’s loan volume and credit quality. ***Disclaimer:** This research is for informational purposes only and does not constitute financial advice. Conduct your own due diligence before investing.*